CAFE Standards, Consumers Set for Head-On Collision

Published October 1, 1997

As the Clinton administration’s global warming team considers ways to reduce emissions of man-made greenhouse gases, federal regulators and environmental groups appear more than willing to lend a helping hand: They want to drive minivans and sport utility vehicles (SUVs) off the road.

America’s love affair with the automobile may have undergone many changes over the decades, but what the Model T, the roadster, the hot rod, the station wagon, and, now, the minivan and SUV have in common is that they reflect the wishes of the American public at different times in the nation’s history. But consumer preferences may be headed for the back seat and, ultimately, a showdown with an old and relentless adversary: corporate average fuel economy (CAFE) standards.

Originally introduced in 1975 to combat the “energy crisis,” CAFE standards singularly failed to do what politicians and regulators intended: reduce American dependence on foreign oil. Imports actually rose between 1974 and 1996, from 35 percent of U.S. oil consumption to over 50 percent. While CAFE standards did nothing to ease America’s appetite for imported oil, they succeeded brilliantly in driving the once-beloved station wagon into virtual oblivion.

Under CAFE’s complex formula, the efficiency of an automaker’s product line, or “fleet,” is measured by the average number of miles its vehicles get on a gallon of gas. The presence of less fuel-efficient cars in an automaker’s fleet drags down its mpg average, pushing it out of compliance with the law and subjecting it to stiff fines. Since family-friendly station wagons got fewer miles per gallon, they had to be removed from Detroit’s fleets.

By contrast, minivans and SUVs are classified as “light trucks” and subject to somewhat less- stringent fuel economy standards. Indeed, the demise of the station wagon parallels the rise of the minivan, as consumers sought and found an attractive alternative vehicle in which to transport their families. Yet now that minivans and SUVs are outselling traditional passenger cars, Washington is preparing the next round of what might be called highway social engineering. CAFE advocates want to raise the passenger-car standard from 27.5 mpg to 40 mpg or more, and to eliminate the lower fuel economy standards for minivans and SUVs.

Automakers will either have to swallow the fines and pass the costs on to consumers or produce even smaller cars and cut back on the number of minivans and SUVs in their fleets. The proposal, as one Chrysler official put it, “puts us at war with our customers.”

It remains to be seen whether Washington regulators will prevent consumers from getting the safety and comfort they want and that minivans and SUVs offer. The alleged threat of global warming has given CAFE supporters another reason to interfere with people’s choices: David Becker of the Sierra Club has called CAFE “the biggest single step to curbing global warming and most successful energy-saving law ever created.”

PF: For more information on the impact proposed new CAFE standards on minivans and sport utility vehicles, call PolicyFax at 847/202-4888. Request “Will Minivans Become an Endangered Species?” a two-page article from the National Center for Policy Analysis (PolicyFax document #8105307); and “Will CAFE Drive Minivans Off the Road?” a one-page Investor’s Business Daily article (document #7209102).